The DA's Demand: $800,000 from Our Practice

Huston, Timothy P., Medical Economics

Accused of overbilling for lab services, the author fought backand won a victory for all doctors in his state.

"Dr. Huston, we have a problem." I didn't pay much heed to my office manager's worried urgency when she showed me the notice from the district attorney of a neighboring county. It was the opening salvo in a battle that would last almost two years, take me to the governor's office, cost my practice more than $100,000, and provide new insight into government officials' potential abuse of power.

The document informed me that the DA had "reasonable belief" my practice had violated Section 655.5 of the California Business and Professions Code. This law addresses how health professionals bill for lab services not done in their offices. It mandates that physicians tell patients where the test was done, how much the lab charged, and any fees the doctor added for such things as drawing blood, preparing the sample, and interpreting results.

Simply stated, the law seeks to prevent physicians from gouging patients. A lot of us questioned whether protecting consumers from a few rogues was worth the considerable burden placed on law-abiding physicians. Never in 13 years of practice has a patient asked what lab I use, let alone gone price-shopping among competitors. The law struck me as a well-intentioned but ultimately inept and counterproductive piece of legislation. Yet we did our best to comply.

Our best was apparently not good enough for the DA, who requested copies of encounter forms and insurance claims for 20 specific patients from the previous two years. No problem, I thought, and we prepared to send along the documentation.

"Tim, we have a problem." This time it was Barb, my partner's wife and our office manager at the time. In some of the 20 cases, we hadn't filled out all the detailed paperwork quite right. In five instances, we'd erred in apportioning charges between lab services and our professional services-mistakes that involved a few dollars at most and usually worked out in patients' favor

In nine cases, though, we'd listed only a non-itemized "global" lab fee for PPO patients. Our front-office staff thought we weren't required to give itemized information to PPO patients, since they weren't responsible for the bill. All the insurance carriers received the required information.

These were harmless paperwork errors, I thought, made by honest people trying to comply with a complex set of requirements. Who would make an issue of something as innocuous as this?

I was so naive.

We composed a lengthy explanatory letter to the DA and sent off the information he'd sought. To be safe, we discontinued billing for outside lab services until we sorted out this mess. The clinical labs would now bill patients and insurers directly-at a higher cost than we had previously charged. (Since we don't contract with HMOs, these were all indemnity or PPO patients.)

A second correspondence arrived a few months later. This one made it clear that the situation was serious. My counsel was invited to meet with the DA. "What is wrong with these people?" I exploded when I read the letter. It amazed me that anyone could think that such picayune errors merited a fraud investigation. Didn't the DA have any honest-to-God crime to keep him busy?

We hired a lawyer named Susan (I'm not using real names), a former RN with limited legal experience. The day she met with the DA was a tense one for me. I clung to the hope that she'd return triumphantly and announce that the DA realized his mistake and wanted to apologize.

When Susan returned that afternoon, I could immediately see how alarmed she was. "They want $800,000," she said bleakly.

I stared at her disbelievingly. "What!? Eight hundred thousand? For what?"

After I'd regained a semblance of composure, Susan related the details of her meeting. Five attorneys had confronted her with a series of impressive-looking handouts, complete with colored pie charts. …

The rest of this article is only available to active members of Questia

Print this page

While we understand printed pages are helpful to our users, this limitation is necessary
to help protect our publishers' copyrighted material and prevent its unlawful distribution.
We are sorry for any inconvenience.